Democracy Now! - Tax Havenshttp://www.democracynow.org/topics/tax_havens
http://creativecommons.org/licenses/by-nc-nd/3.0/us/http://www.rssboard.org/rss-specificationmail@democracynow.org (Democracy Now!)http://www.democracynow.org/images/dn-logo-for-podcast.png?201503121638http://www.democracynow.org/topics/tax_havens
144144Democracy Now! - Tax Havensen-USDemocracy Now! - Tax HavensNew GOP Majority Backs Amnesty for Corporate Tax Dodgers, But Not Undocumented Immigrantshttp://www.democracynow.org/2014/11/7/new_gop_majority_backs_amnesty_for
tag:democracynow.org,2014-11-07:en/story/585f3b AMY GOODMAN : Before we move on to our Democracy Now! exclusive, Juan, well, this is the end of election week, and you did a very interesting piece in the New York Daily News about the issue of immigration.
JUAN GONZÁLEZ: Yeah, well, my column in today&#8217;s paper counterposes the Republicans saying that there will be a war if President Obama moves forward on his promise of an executive order on immigration reform. The Republicans don&#8217;t want amnesty or some kind of amnesty for undocumented immigrants, but they immediately have said after the election that they want amnesty for corporate America. One of the big issues they&#8217;re going to be pushing forward now, in terms of tax reform, is this amnesty or holiday for repatriated profits from corporations around the world. About $2 trillion are sitting overseas—money of Microsoft and Pfizer and Apple and General Electric. They don&#8217;t want to bring it back into the country because they&#8217;d have to pay the 35 percent corporate tax. So, the Republicans are pressing. And President Obama, in the press conference when he was asked after the election, seemed open to the idea of reducing that tax for one year to maybe 5 percent, which is what corporate America would like, but he wants in exchange that money used for infrastructure investment. It&#8217;s still going to be a huge windfall for corporate America. They&#8217;ve been lobbying fiercely for it. And right away, the Republicans want amnesty for that, but they certainly don&#8217;t want it for immigrant workers who&#8217;ve been undocumented living in the country, many of them working hard and staying out of trouble for decades. So, we&#8217;ll see how the Democratic Party and President Obama responds to the choices on this amnesty issue.
AMY GOODMAN : And we&#8217;ll link to your article at democracynow.org. AMYGOODMAN: Before we move on to our Democracy Now! exclusive, Juan, well, this is the end of election week, and you did a very interesting piece in the New York Daily News about the issue of immigration.

JUAN GONZÁLEZ: Yeah, well, my column in today’s paper counterposes the Republicans saying that there will be a war if President Obama moves forward on his promise of an executive order on immigration reform. The Republicans don’t want amnesty or some kind of amnesty for undocumented immigrants, but they immediately have said after the election that they want amnesty for corporate America. One of the big issues they’re going to be pushing forward now, in terms of tax reform, is this amnesty or holiday for repatriated profits from corporations around the world. About $2 trillion are sitting overseas—money of Microsoft and Pfizer and Apple and General Electric. They don’t want to bring it back into the country because they’d have to pay the 35 percent corporate tax. So, the Republicans are pressing. And President Obama, in the press conference when he was asked after the election, seemed open to the idea of reducing that tax for one year to maybe 5 percent, which is what corporate America would like, but he wants in exchange that money used for infrastructure investment. It’s still going to be a huge windfall for corporate America. They’ve been lobbying fiercely for it. And right away, the Republicans want amnesty for that, but they certainly don’t want it for immigrant workers who’ve been undocumented living in the country, many of them working hard and staying out of trouble for decades. So, we’ll see how the Democratic Party and President Obama responds to the choices on this amnesty issue.

]]>
Fri, 07 Nov 2014 00:00:00 -0500The Biggest Tax Scam Ever: How Corporate America Parks Profits Overseas, Avoiding Billions in Taxeshttp://www.democracynow.org/2014/8/28/the_biggest_tax_scam_ever_how
tag:democracynow.org,2014-08-28:en/story/228590 AMY GOODMAN : Well, some are calling for a boycott of Burger King because of the merger. Democratic Senator Sherrod Brown of Ohio issued a statement that, quote, &quot;Burger King&#8217;s decision to abandon the United States means consumers should turn to Wendy&#8217;s Old Fashioned Hamburgers or White Castle sliders. ... Burger King has always said &#39;Have it Your Way.&#39; Well, my way is to support two Ohio companies that haven&#8217;t abandoned their country or customers,&quot; the senator said. Both Wendy&#8217;s and White Castle are based in Ohio. Brown also called for the creation of a global minimum tax to eliminate incentives for companies to move. And I would like Tim Dickinson to comment on this. Tim Dickinson has written extensively about these kinds of deals and others for Rolling Stone , where he&#8217;s a contributing editor. Talk about this and then what you call the &quot;biggest tax scam ever,&quot; Tim.
TIM DICKINSON : Well, so the inversion trend is just the tip of a very destructive iceberg that&#8217;s seen the hollowing out of our corporate tax base. And so, the inversions, you know, is just basically a legal scam that lets a company technically offshore itself for a lower tax rate. And it goes sort of hat in hand with companies shipping massive quantities of corporate profits overseas through sort of elaborate accounting schemes. And while it&#8217;s overseas, it sits there tax-free, accumulates tax-free kind of like a 401(k) does. And so, right now there&#8217;s about $2 trillion in corporate profits that are stockpiled overseas, on which the U.S. government is technically owed something like half a trillion dollars. So, at the same time that we&#8217;re cutting food stamps, that we&#8217;re cutting home heating aid to the elderly, you know, there&#8217;s literally a jackpot of half a trillion dollars that politicians on both sides of the aisle just won&#8217;t go after, because there&#8217;s just an imbalance of power there. The corporate power has grown much greater than state power in this case.
JUAN GONZÁLEZ: And, Tim Dickinson, one thing that many of these companies that are parking their profits overseas keep quietly lobbying for is amnesty, right? They want a tax amnesty, where the government would lower their taxes temporarily, so they could bring this money back. Could you talk about that and who in Congress champions that?
TIM DICKINSON : Well, I mean, it&#8217;s like a bailout, basically. It&#8217;s a bailout on the tax bill. And this was done in the Bush administration in 2004. The nominal U.S. tax rate, nobody really pays it, but the nominal rate is 35 percent. And in the Bush era, corporations were allowed to bring their money home at a rate of five-and-a-quarter percent, 5.25 percent, so basically 30 points shaved off of the tax rate. And so, politicians in both parties really kind of are attracted to this idea. There are few folks who have raised enough of a stink about it that it hasn&#8217;t happened. But both really—literally, both sides of the aisle—most recently, Harry Reid and Rand Paul were shopping a bill that would allow corporations to bring cash home at a low rate of 9.5 percent; Dave Camp, the chief tax writer in the House, Republican side, as low as 3.25 percent, I believe; and then on the Senate side, Ron Wyden&#8217;s bill would again allow a 5.25 percent tax holiday, is what the jargon is.
AMY GOODMAN : So, James?
JAMES HENRY : I was just going to say, the 2004 experiment with this idea is illustrative. I mean, about a third of the benefits from that went to one company, Pfizer, and they proceeded to lay off their employees. It produced no jobs. Essentially, management got rich, because they used the money for management buyouts and for shareholder share repurchases. So it&#8217;s a good example of how bad this idea is.
AMY GOODMAN : Tim Dickinson, you write about Google. You write about the company that makes Viagra. You write about Apple. Tell us about what they take advantage of.
TIM DICKINSON : Well, so, there are a myriad tax schemes by which U.S. profits are funneled out of the country in ways that make them look like costs. So, to take Pfizer, for example, on Viagra, they had transferred at a very early stage of drug development the economic rights to the intellectual property behind Viagra to a shell company in Liechtenstein, which is a tax haven in Europe. And so, on every sale of the drug here, the Liechtenstein company would charge a very steep royalty. And so, the American company would appear to not only not make any profit on those sales, but actually be creating a business loss here in America, because they had to pay this business expense to its own subsidiary. And so, you&#8217;re lowering the tax bill on the American side, even as you&#8217;re increasing the profits on the Liechtenstein side. So, it&#8217;s this incredible racket, basically.
And it appears to be legal. This is not, you know, something that has been cracked down on by Congress. But the white-shoe accountants have figured out a way to sort of disappear this money and put it overseas. And I should mention that the U.S. has a global system of taxation, so that corporate profits around the world from an American-based multinational are supposed to be taxed. And that reflects the idea that the U.S. Navy secures shipping lanes, that our courts protect intellectual property across the world. And this has been practiced for more than a century, Supreme Court-approved since 1924. So this is not a new idea. But there&#8217;s sort of an incredible amount of accounting innovation that has gone into figuring out how to make profits disappear and in fact appear as losses in the United States, as the cash piles up in foreign subsidiaries, which in turn bank their money right back here in the United States. And then, when the CEOs need to use that money here in the United States, there&#8217;s something called &quot;synthetic cash repatriation,&quot; where they&#8217;re able to use the same sort of accounting tricks either through short-term revolving loans or through bond offerings here in the United States, as Apple has done. And so, the cash can sort of—the power of the cash can reappear here in the United States. And the only one cut out of the loop is Uncle Sam, who&#8217;s supposed to get, you know, 35 percent the moment the money returns to the country.
JUAN GONZÁLEZ: Well, James Henry, I&#8217;m curious why there isn&#8217;t a greater public outcry over this. You essentially have American companies who take advantage of the protections that the American government provides—the patent laws, the intellectual property laws, as you say, the military that assures international commerce goes on—they take advantage of all the benefits of the government, but then they shift their money overseas where they don&#8217;t have to pay taxes to finance the very government that provides them that protection.
JAMES HENRY : Well, that&#8217;s exactly right. And small business is not benefiting from all these tax games that multinationals are able to play, and they&#8217;re having to compete with these companies here. You know, it really has been a growing movement, I think, in the tax justice movement. We made a film called We&#8217;re Not Broke , which is on Netflix and is about this very issue of corporate tax dodging, you know, the outrageous behavior of these companies offshoring their intellectual property, that was paid for by U.S. R&amp;D subsidies here, to places like Ireland and Bermuda, where they have no research labs, and then paying themselves royalties tax-free. You know, the outrages are clear. The issue is, these are very powerful lobbies. The corporate tax lobby employs 1,800 tax lobbyists full-time in Washington working on these issues, night and day. I mean, I assume they take time off for Burger King once in a while. But the issue is, you know, we&#8217;re just outgunned on the level of the substance and the—you know, the—
AMY GOODMAN : So it&#8217;s three per every legislator in Washington, Congress and senators.
JAMES HENRY : Absolutely. And, you know, they—
AMY GOODMAN : And, of course, much more.
JAMES HENRY : I mean, this lobby has actually grown in power as the tax rates have actually fallen since the 1980s. I mean, we now have cut corporate tax rates in the United States roughly in half. There&#8217;s a race to the bottom worldwide. And this just has to be seen as part of that global phenomenon. So, if the United States persists in cutting its tax rates, it&#8217;s going to have terrible impact on other countries, developing countries in particular. If there&#8217;s no corporate income tax in the United States, there&#8217;s no tax credit for the taxes that American companies pay abroad, and so those countries will be forced to reduce their tax rates, as well. So, you know, this is not just about inversions. It&#8217;s part of a growing, I think, very radical movement on the right to essentially get rid of the corporate income tax.
AMY GOODMAN : Well, last point. I asked you about Google and Apple, Tim Dickinson. If you could just explain what they do, as we wrap up?
TIM DICKINSON : So, Apple has this amazing deal, where they&#8217;ve got essentially a shadow company in Ireland. And it&#8217;s incorporated in Ireland, but for Irish purposes, it&#8217;s an American company, and for American purposes, it&#8217;s an Irish company. And so you end up with this black hole of taxation where in fact this Apple subsidiary files a tax return to no government in the world. And so, it can use all kinds of accounting tricks to funnel money to this company, and they sit there essentially absolutely untaxed. Just there&#8217;s no tax return. And so you have billions of dollars sitting there. And again, when Apple needs billions of dollars to fund its American operations, it has bond offerings, and its cost of borrowing here in the United States is incredibly low. Just investors are virtually paying Apple to raise this money, because it&#8217;s secured by these massive piles of cash, technically abroad, although they&#8217;re actually banked reportedly in Manhattan. And so, you know, I believe that this is a phenomenon—really, I mean, we talk about it as a right-wing phenomenon, but it has infected both parties, that there is no meaningful party out there that is trying to address this. In fact, both parties now agree that there should be a—we should shave 10 percentage points off the tax rate, get the American corporate tax rate down to 25 percent. That&#8217;s a race to the bottom that America can&#8217;t win. There&#8217;s no way to run a global superpower and compete with low-tax nations like Ireland. But I just need to emphasize that this is truly a bipartisan scenario. Both parties are pushing corporate tax holidays. Both parties are pushing to lower the corporate rate, even though the rate that—effective rate that companies pay here on their profits is actually, in many cases, lower than the efective rate they pay in other countries.
AMY GOODMAN : Tim Dickinson, we want to thank you for being with us, covering national affairs for Rolling Stone , where he&#8217;s contributing editor. We&#8217;ll link to your latest piece , which is called &quot;The Biggest Tax Scam Ever,&quot; speaking to us from Portland, Oregon. And thanks so much to James Henry, the former chief economist for McKinsey &amp; Company, lawyer and senior adviser with the Tax Justice Network.
This is Democracy Now! When we come back, the &quot;Activists&#8217; Guide to Archiving Video.&quot; What happens when you take a video on your cellphone? What should you do with it? Stay with us. AMYGOODMAN: Well, some are calling for a boycott of Burger King because of the merger. Democratic Senator Sherrod Brown of Ohio issued a statement that, quote, "Burger King’s decision to abandon the United States means consumers should turn to Wendy’s Old Fashioned Hamburgers or White Castle sliders. ... Burger King has always said 'Have it Your Way.' Well, my way is to support two Ohio companies that haven’t abandoned their country or customers," the senator said. Both Wendy’s and White Castle are based in Ohio. Brown also called for the creation of a global minimum tax to eliminate incentives for companies to move. And I would like Tim Dickinson to comment on this. Tim Dickinson has written extensively about these kinds of deals and others for Rolling Stone, where he’s a contributing editor. Talk about this and then what you call the "biggest tax scam ever," Tim.

TIMDICKINSON: Well, so the inversion trend is just the tip of a very destructive iceberg that’s seen the hollowing out of our corporate tax base. And so, the inversions, you know, is just basically a legal scam that lets a company technically offshore itself for a lower tax rate. And it goes sort of hat in hand with companies shipping massive quantities of corporate profits overseas through sort of elaborate accounting schemes. And while it’s overseas, it sits there tax-free, accumulates tax-free kind of like a 401(k) does. And so, right now there’s about $2 trillion in corporate profits that are stockpiled overseas, on which the U.S. government is technically owed something like half a trillion dollars. So, at the same time that we’re cutting food stamps, that we’re cutting home heating aid to the elderly, you know, there’s literally a jackpot of half a trillion dollars that politicians on both sides of the aisle just won’t go after, because there’s just an imbalance of power there. The corporate power has grown much greater than state power in this case.

JUAN GONZÁLEZ: And, Tim Dickinson, one thing that many of these companies that are parking their profits overseas keep quietly lobbying for is amnesty, right? They want a tax amnesty, where the government would lower their taxes temporarily, so they could bring this money back. Could you talk about that and who in Congress champions that?

TIMDICKINSON: Well, I mean, it’s like a bailout, basically. It’s a bailout on the tax bill. And this was done in the Bush administration in 2004. The nominal U.S. tax rate, nobody really pays it, but the nominal rate is 35 percent. And in the Bush era, corporations were allowed to bring their money home at a rate of five-and-a-quarter percent, 5.25 percent, so basically 30 points shaved off of the tax rate. And so, politicians in both parties really kind of are attracted to this idea. There are few folks who have raised enough of a stink about it that it hasn’t happened. But both really—literally, both sides of the aisle—most recently, Harry Reid and Rand Paul were shopping a bill that would allow corporations to bring cash home at a low rate of 9.5 percent; Dave Camp, the chief tax writer in the House, Republican side, as low as 3.25 percent, I believe; and then on the Senate side, Ron Wyden’s bill would again allow a 5.25 percent tax holiday, is what the jargon is.

AMYGOODMAN: So, James?

JAMESHENRY: I was just going to say, the 2004 experiment with this idea is illustrative. I mean, about a third of the benefits from that went to one company, Pfizer, and they proceeded to lay off their employees. It produced no jobs. Essentially, management got rich, because they used the money for management buyouts and for shareholder share repurchases. So it’s a good example of how bad this idea is.

AMYGOODMAN: Tim Dickinson, you write about Google. You write about the company that makes Viagra. You write about Apple. Tell us about what they take advantage of.

TIMDICKINSON: Well, so, there are a myriad tax schemes by which U.S. profits are funneled out of the country in ways that make them look like costs. So, to take Pfizer, for example, on Viagra, they had transferred at a very early stage of drug development the economic rights to the intellectual property behind Viagra to a shell company in Liechtenstein, which is a tax haven in Europe. And so, on every sale of the drug here, the Liechtenstein company would charge a very steep royalty. And so, the American company would appear to not only not make any profit on those sales, but actually be creating a business loss here in America, because they had to pay this business expense to its own subsidiary. And so, you’re lowering the tax bill on the American side, even as you’re increasing the profits on the Liechtenstein side. So, it’s this incredible racket, basically.

And it appears to be legal. This is not, you know, something that has been cracked down on by Congress. But the white-shoe accountants have figured out a way to sort of disappear this money and put it overseas. And I should mention that the U.S. has a global system of taxation, so that corporate profits around the world from an American-based multinational are supposed to be taxed. And that reflects the idea that the U.S. Navy secures shipping lanes, that our courts protect intellectual property across the world. And this has been practiced for more than a century, Supreme Court-approved since 1924. So this is not a new idea. But there’s sort of an incredible amount of accounting innovation that has gone into figuring out how to make profits disappear and in fact appear as losses in the United States, as the cash piles up in foreign subsidiaries, which in turn bank their money right back here in the United States. And then, when the CEOs need to use that money here in the United States, there’s something called "synthetic cash repatriation," where they’re able to use the same sort of accounting tricks either through short-term revolving loans or through bond offerings here in the United States, as Apple has done. And so, the cash can sort of—the power of the cash can reappear here in the United States. And the only one cut out of the loop is Uncle Sam, who’s supposed to get, you know, 35 percent the moment the money returns to the country.

JUAN GONZÁLEZ: Well, James Henry, I’m curious why there isn’t a greater public outcry over this. You essentially have American companies who take advantage of the protections that the American government provides—the patent laws, the intellectual property laws, as you say, the military that assures international commerce goes on—they take advantage of all the benefits of the government, but then they shift their money overseas where they don’t have to pay taxes to finance the very government that provides them that protection.

JAMESHENRY: Well, that’s exactly right. And small business is not benefiting from all these tax games that multinationals are able to play, and they’re having to compete with these companies here. You know, it really has been a growing movement, I think, in the tax justice movement. We made a film called We’re Not Broke, which is on Netflix and is about this very issue of corporate tax dodging, you know, the outrageous behavior of these companies offshoring their intellectual property, that was paid for by U.S. R&D subsidies here, to places like Ireland and Bermuda, where they have no research labs, and then paying themselves royalties tax-free. You know, the outrages are clear. The issue is, these are very powerful lobbies. The corporate tax lobby employs 1,800 tax lobbyists full-time in Washington working on these issues, night and day. I mean, I assume they take time off for Burger King once in a while. But the issue is, you know, we’re just outgunned on the level of the substance and the—you know, the—

AMYGOODMAN: So it’s three per every legislator in Washington, Congress and senators.

JAMESHENRY: Absolutely. And, you know, they—

AMYGOODMAN: And, of course, much more.

JAMESHENRY: I mean, this lobby has actually grown in power as the tax rates have actually fallen since the 1980s. I mean, we now have cut corporate tax rates in the United States roughly in half. There’s a race to the bottom worldwide. And this just has to be seen as part of that global phenomenon. So, if the United States persists in cutting its tax rates, it’s going to have terrible impact on other countries, developing countries in particular. If there’s no corporate income tax in the United States, there’s no tax credit for the taxes that American companies pay abroad, and so those countries will be forced to reduce their tax rates, as well. So, you know, this is not just about inversions. It’s part of a growing, I think, very radical movement on the right to essentially get rid of the corporate income tax.

AMYGOODMAN: Well, last point. I asked you about Google and Apple, Tim Dickinson. If you could just explain what they do, as we wrap up?

TIMDICKINSON: So, Apple has this amazing deal, where they’ve got essentially a shadow company in Ireland. And it’s incorporated in Ireland, but for Irish purposes, it’s an American company, and for American purposes, it’s an Irish company. And so you end up with this black hole of taxation where in fact this Apple subsidiary files a tax return to no government in the world. And so, it can use all kinds of accounting tricks to funnel money to this company, and they sit there essentially absolutely untaxed. Just there’s no tax return. And so you have billions of dollars sitting there. And again, when Apple needs billions of dollars to fund its American operations, it has bond offerings, and its cost of borrowing here in the United States is incredibly low. Just investors are virtually paying Apple to raise this money, because it’s secured by these massive piles of cash, technically abroad, although they’re actually banked reportedly in Manhattan. And so, you know, I believe that this is a phenomenon—really, I mean, we talk about it as a right-wing phenomenon, but it has infected both parties, that there is no meaningful party out there that is trying to address this. In fact, both parties now agree that there should be a—we should shave 10 percentage points off the tax rate, get the American corporate tax rate down to 25 percent. That’s a race to the bottom that America can’t win. There’s no way to run a global superpower and compete with low-tax nations like Ireland. But I just need to emphasize that this is truly a bipartisan scenario. Both parties are pushing corporate tax holidays. Both parties are pushing to lower the corporate rate, even though the rate that—effective rate that companies pay here on their profits is actually, in many cases, lower than the efective rate they pay in other countries.

AMYGOODMAN: Tim Dickinson, we want to thank you for being with us, covering national affairs for Rolling Stone, where he’s contributing editor. We’ll link to your latest piece, which is called "The Biggest Tax Scam Ever," speaking to us from Portland, Oregon. And thanks so much to James Henry, the former chief economist for McKinsey & Company, lawyer and senior adviser with the Tax Justice Network.

This is Democracy Now! When we come back, the "Activists’ Guide to Archiving Video." What happens when you take a video on your cellphone? What should you do with it? Stay with us.

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Thu, 28 Aug 2014 00:00:00 -0400Too Big to Jail? Credit Suisse Bank Pleads Guilty to Decades of Tax Evasion, But Execs Avoid Prisonhttp://www.democracynow.org/2014/5/20/too_big_to_jail_credit_suisse
tag:democracynow.org,2014-05-20:en/story/7a4fe5 AMY GOODMAN : This is Democracy Now! , democracynow.org, The War and Peace Report . Just a little correction: Credit Suisse is the largest bank to plead guilty to a criminal charge. This is Democracy Now! I&#8217;m Amy Goodman, with Aaron Maté.
AARON MATÉ: Well, yes, indeed, European banking giant Credit Suisse has pleaded guilty to a criminal charge for helping American clients avoid paying taxes by concealing assets in illegal, undeclared bank accounts. Credit Suisse becomes the largest bank to plead guilty to a criminal charge in 20 years. Attorney General Eric Holder announced the plea on Monday.
ATTORNEY GENERAL ERIC HOLDER : In the course of our painstaking, years-long investigation, the department discovered that Credit Suisse and its subsidiaries engaged in an extensive and a wide-ranging conspiracy to help U.S. taxpayers evade taxes. The bank actively helped its account holders to deceive the IRS by concealing assets and income in illegal, undeclared bank accounts. These secret offshore accounts were held in the names of sham entities and foundations, and this conspiracy spanned decades.
AARON MATÉ: As part of the plea deal, Credit Suisse will pay about $2.6 billion in penalties and hire an independent monitor. But the bank will not be required to turn over the names of the Americans who used the bank to evade taxes.
AMY GOODMAN : Under the deal, no senior Credit Suisse executives will face jail time, and the bank will be allowed to continue operating in the United States. According to The New York Times , the Securities and Exchange Commission voted last week to grant Credit Suisse a temporary exemption from a federal law that requires a bank to hand over its investment-adviser license in the event of a guilty plea.
To talk more about the case, we&#8217;re joined by James Henry, former chief economist at McKinsey &amp; Co., now a senior adviser to the Tax Justice Network and senior fellow at the Vale Columbia Center on Sustainable International Investment.
Welcome to Democracy Now!
JAMES HENRY : Good morning.
AMY GOODMAN : Can you assess this settlement?
JAMES HENRY : Well, I think it&#8217;s a big missed opportunity. You know, this investigation has been going on for four years. You know, this is one of several Swiss banks that are under investigation. Fourteen were all lined up. And the reason the Swiss stock market, and in particular, Credit Suisse, is soaring this morning is because they&#8217;re—they are delighted with this deal. They&#8217;re yodeling through the Alps over the light touch that Eric Holder—you know, who has a tradition of this. In 2000, he was the assistant attorney general who signed off on the Marc Rich pardon. And in this case, you know, two—
AMY GOODMAN : And Marc Rich was?
JAMES HENRY : Was the, yeah, major—
AMY GOODMAN : When President—
JAMES HENRY : —Swiss-based trader who was violating U.S. regulations and tax evading all over the place at that point. So—
AMY GOODMAN : He was the man that President Clinton pardoned.
JAMES HENRY : President Clinton pardoned at that point, got enormous backlash for that. In this case, we have the second-largest Swiss bank, a bank with 45,000 employees and 1.26 trillion Swiss franc of client assets under management, you know, getting away with essentially a fine that amounts to three months of their net earnings. No senior executives, as you mentioned, are going to jail. [Brady] Dougan, the CEO , is expected to stay on, in fact, and he said in front of his shareholders this week that this will have a very slight impact on Credit Suisse&#8217;s performance. You know, I think we missed the opportunity to really send a message here, because the way they structured this plea bargain was to rule out any impact on Credit Suisse&#8217;s license to operate in the United States. It was the only impact that a criminal prosecution could have had. And I think, going forward, the banks in Switzerland will be looking for new ways, new inventive ways of serving Americans.
AARON MATÉ: In terms of withholding the names of the clients who hid their money, the argument from Credit Suisse was that, of course, the Swiss law prevents them from doing that. It protects their privacy. Does that stand here in the U.S.? And how big of a win for Credit Suisse was that, in that they got to keep the names of those they helped?
JAMES HENRY : Oh, it&#8217;s huge. I mean, this is worse than the UBS settlement in 2009, in which some names were given up. And so, you know, this is part of a negotiation. The Justice Department can say, &quot;Look, you know, no deal. You want your license? You give us information on these Americans who are evading.&quot;
AMY GOODMAN : I&#8217;d like to go to a brief clip from the Senate Subcommittee on Investigations meeting in February. Senator Carl Levin questioned Credit Suisse CEO Brady Dougan about the U.S. citizens who had been evading taxes.
SEN . CARL LEVIN : So we&#8217;re interested in collecting taxes, as well, that are owed, that have been evaded. And we need the cooperation of the banks in order to do that. But if the banks won&#8217;t cooperate, citing Swiss secrecy laws, then we simply have got to use our own domestic laws to force cooperation from the banks. Now, you cite Swiss secrecy laws. And I gather that you—you said, I think, Mr. Dugan, that you don&#8217;t agree with those laws. Is that correct?
BRADY DOUGAN : Well, I think our position is very clear, which is we are ready to provide any information that we can legally provide. But I think that, as you point out, the issue that we have is we have two different legal jurisdictions, and therefore, you know, for us to break the law in one jurisdiction in order to provide that information is difficult for us to do. But I think the most important thing, from our point of view, we can&#8217;t necessarily influence these discussions between governments and how they—how they—how they proceed. We are ready to provide any information that we can provide legally.
AMY GOODMAN : That&#8217;s Credit Suisse CEO Brady Dougan testifying before the Senate. James Henry, do the—does the administration have a reason for not wanting these names released, as well?
JAMES HENRY : Well, that&#8217;s hard to say. I&#8217;ve talked to people in the administration, you know, but the Obama—
AMY GOODMAN : Whether it&#8217;s the Obama administration—
JAMES HENRY : Yeah, or any.
AMY GOODMAN : —Bush administration, right.
JAMES HENRY : Well, this cuts across parties. This is really an issue on—I guess you could call it the bankster party, agrees, which is, basically, they have been very soft on punishing corporate crime, in general, with respect to banks. And Wall Street banks have been serial violators here. We&#8217;re talking about, in this case, a Swiss bank that, you know, has been doing this kind of activity for decades. Dougan has been at the bank for 25 years, and throughout that period they have been operating this kind of money laundering for wealthy tax evaders.
AMY GOODMAN : Explain what they did. What was the crime that they committed that they&#8217;re paying for?
JAMES HENRY : They had—you know, for example, they had a department that&#8217;s set up so that wealthy Americans who came to Geneva Airport had a special office. And, you know, something like 10,000 clients of this bank went through that office and, you know, were able to bring in their transactions, check on their accounts in utter privacy. There&#8217;s no name on the door. But, you know, they would send bankers undercover to Art Basel, big Miami art convention, every year and meet clients. They sponsored a lot of these art shows.
AMY GOODMAN : So Swiss bankers would come in on tourist visas.
JAMES HENRY : Exactly.
AMY GOODMAN : And do—
JAMES HENRY : And they would be basically recruiting wealthy Americans to take their money secretly to Switzerland, put it there essentially tax-free, no reporting to the IRS . So, for wealthy Americans who were able to play that game, it was worth quite a bit. Of course, for the rest of us, the ordinary taxpayers who are, you know, withheld against and don&#8217;t have the option of going to Switzerland, you know, will never meet a Swiss banker in the United States. This is just another case of where we&#8217;re transferring tax burdens to the poor and the middle class, who don&#8217;t have any choice but to pay up. So, basic question about the rule of law here, about justice being essentially for sale.
You mentioned the Obama administration. Eric Holder used to be an attorney at Covington &amp; Burling, after he left the Clinton administration. He was handling UBS as a client. The chief IRS legal counsel, Mr. Wilkins, used to be a registered representative for the Swiss Banking Association in Washington, when he was a partner at WilmerHale. You have the U.S. treasury secretary, was in charge of Citibank&#8217;s global private banking department when he was at Citibank in 2006. So this administration is literally—and, you know, one of the key golfing partners of the president of the United States, Robert Wolf, used to run UBS America. He was a big fundraiser for Obama in 2008. So this administration is permeated with people who are basically very sympathetic to Wall Street and to Swiss interests, as well. So—
AARON MATÉ: Well, you mentioned Attorney General Eric Holder, who&#8217;s been sort of the architect of a strategy that forcing banks into guilty pleas should be done in a way that doesn&#8217;t harm the economy. And he used his weekly message earlier this month to clarify the Department of Justice position on prosecuting financial fraud.
ATTORNEY GENERAL ERIC HOLDER : There is no such thing as too big to jail. Some have used that phrase to describe the theory that certain financial institutions, even if they engage in criminal misconduct, should be considered immune from prosecution due to their sheer size and their influence on the economy. That view is mistaken, and it is a view that has been rejected by the Department of Justice. To be clear, no individual or company, no matter how large or how profitable, is above the law.
AARON MATÉ: Testifying before the Senate Judiciary Committee a year ago, Holder had in fact suggested that some banks are too big to jail. Do you agree with his denial now that that strategy is not in effect?
JAMES HENRY : There&#8217;s no evidence in the settlement that there&#8217;s anyone going to jail. At the senior levels of Credit Suisse, everyone is in place. The chairman of Credit Suisse today said that they were &quot;white as snow&quot; and that both he and Dougan would remain on. You know, so that&#8217;s just rhetoric. And I think the problem is, we have a lot of rhetoric, and major media are basically playing this up as a major settlement, a first criminal prosecution. The BBC yesterday said that this was the end of bank secrecy in Switzerland. This is just ludicrous. If you look below the covers, this is a big missed opportunity. It&#8217;s—you know, we&#8217;re not going to have this kind of opportunity again very soon.
AMY GOODMAN : Is it a crime for someone to secret away their finances in a Swiss bank?
JAMES HENRY : If you&#8217;re a U.S. citizen, you have to report your income to—worldwide income to the Treasury and the state tax authorities, as well.
AMY GOODMAN : What happened to those names that were released by UBS of wealthy Americans who were hiding their money away in Swiss bank accounts? And what should happen to people?
JAMES HENRY : Well, there have been a lot of settlements with those folks, private settlements that—you know, the IRS did go after quite a few of them. One of the whistleblowers in that case got—Bradley Birkenfeld got a large settlement as a reward for his activity. But one of the issues here is that, in Credit Suisse, we didn&#8217;t have whistleblowers, and this Justice Department has really failed to produce or to take advantage of Swiss whistleblowers who were available to them. And so we don&#8217;t have any names from whistleblowers like we had in the UBS case. And in this case, they are invoking Swiss secrecy. AMYGOODMAN: This is Democracy Now!, democracynow.org, The War and Peace Report. Just a little correction: Credit Suisse is the largest bank to plead guilty to a criminal charge. This is Democracy Now! I’m Amy Goodman, with Aaron Maté.

AARON MATÉ: Well, yes, indeed, European banking giant Credit Suisse has pleaded guilty to a criminal charge for helping American clients avoid paying taxes by concealing assets in illegal, undeclared bank accounts. Credit Suisse becomes the largest bank to plead guilty to a criminal charge in 20 years. Attorney General Eric Holder announced the plea on Monday.

ATTORNEYGENERALERICHOLDER: In the course of our painstaking, years-long investigation, the department discovered that Credit Suisse and its subsidiaries engaged in an extensive and a wide-ranging conspiracy to help U.S. taxpayers evade taxes. The bank actively helped its account holders to deceive the IRS by concealing assets and income in illegal, undeclared bank accounts. These secret offshore accounts were held in the names of sham entities and foundations, and this conspiracy spanned decades.

AARON MATÉ: As part of the plea deal, Credit Suisse will pay about $2.6 billion in penalties and hire an independent monitor. But the bank will not be required to turn over the names of the Americans who used the bank to evade taxes.

AMYGOODMAN: Under the deal, no senior Credit Suisse executives will face jail time, and the bank will be allowed to continue operating in the United States. According to The New York Times, the Securities and Exchange Commission voted last week to grant Credit Suisse a temporary exemption from a federal law that requires a bank to hand over its investment-adviser license in the event of a guilty plea.

To talk more about the case, we’re joined by James Henry, former chief economist at McKinsey & Co., now a senior adviser to the Tax Justice Network and senior fellow at the Vale Columbia Center on Sustainable International Investment.

Welcome to Democracy Now!

JAMESHENRY: Good morning.

AMYGOODMAN: Can you assess this settlement?

JAMESHENRY: Well, I think it’s a big missed opportunity. You know, this investigation has been going on for four years. You know, this is one of several Swiss banks that are under investigation. Fourteen were all lined up. And the reason the Swiss stock market, and in particular, Credit Suisse, is soaring this morning is because they’re—they are delighted with this deal. They’re yodeling through the Alps over the light touch that Eric Holder—you know, who has a tradition of this. In 2000, he was the assistant attorney general who signed off on the Marc Rich pardon. And in this case, you know, two—

AMYGOODMAN: And Marc Rich was?

JAMESHENRY: Was the, yeah, major—

AMYGOODMAN: When President—

JAMESHENRY: —Swiss-based trader who was violating U.S. regulations and tax evading all over the place at that point. So—

AMYGOODMAN: He was the man that President Clinton pardoned.

JAMESHENRY: President Clinton pardoned at that point, got enormous backlash for that. In this case, we have the second-largest Swiss bank, a bank with 45,000 employees and 1.26 trillion Swiss franc of client assets under management, you know, getting away with essentially a fine that amounts to three months of their net earnings. No senior executives, as you mentioned, are going to jail. [Brady] Dougan, the CEO, is expected to stay on, in fact, and he said in front of his shareholders this week that this will have a very slight impact on Credit Suisse’s performance. You know, I think we missed the opportunity to really send a message here, because the way they structured this plea bargain was to rule out any impact on Credit Suisse’s license to operate in the United States. It was the only impact that a criminal prosecution could have had. And I think, going forward, the banks in Switzerland will be looking for new ways, new inventive ways of serving Americans.

AARON MATÉ: In terms of withholding the names of the clients who hid their money, the argument from Credit Suisse was that, of course, the Swiss law prevents them from doing that. It protects their privacy. Does that stand here in the U.S.? And how big of a win for Credit Suisse was that, in that they got to keep the names of those they helped?

JAMESHENRY: Oh, it’s huge. I mean, this is worse than the UBS settlement in 2009, in which some names were given up. And so, you know, this is part of a negotiation. The Justice Department can say, "Look, you know, no deal. You want your license? You give us information on these Americans who are evading."

AMYGOODMAN: I’d like to go to a brief clip from the Senate Subcommittee on Investigations meeting in February. Senator Carl Levin questioned Credit Suisse CEO Brady Dougan about the U.S. citizens who had been evading taxes.

SEN. CARLLEVIN: So we’re interested in collecting taxes, as well, that are owed, that have been evaded. And we need the cooperation of the banks in order to do that. But if the banks won’t cooperate, citing Swiss secrecy laws, then we simply have got to use our own domestic laws to force cooperation from the banks. Now, you cite Swiss secrecy laws. And I gather that you—you said, I think, Mr. Dugan, that you don’t agree with those laws. Is that correct?

BRADYDOUGAN: Well, I think our position is very clear, which is we are ready to provide any information that we can legally provide. But I think that, as you point out, the issue that we have is we have two different legal jurisdictions, and therefore, you know, for us to break the law in one jurisdiction in order to provide that information is difficult for us to do. But I think the most important thing, from our point of view, we can’t necessarily influence these discussions between governments and how they—how they—how they proceed. We are ready to provide any information that we can provide legally.

AMYGOODMAN: That’s Credit Suisse CEO Brady Dougan testifying before the Senate. James Henry, do the—does the administration have a reason for not wanting these names released, as well?

JAMESHENRY: Well, that’s hard to say. I’ve talked to people in the administration, you know, but the Obama—

AMYGOODMAN: Whether it’s the Obama administration—

JAMESHENRY: Yeah, or any.

AMYGOODMAN: —Bush administration, right.

JAMESHENRY: Well, this cuts across parties. This is really an issue on—I guess you could call it the bankster party, agrees, which is, basically, they have been very soft on punishing corporate crime, in general, with respect to banks. And Wall Street banks have been serial violators here. We’re talking about, in this case, a Swiss bank that, you know, has been doing this kind of activity for decades. Dougan has been at the bank for 25 years, and throughout that period they have been operating this kind of money laundering for wealthy tax evaders.

AMYGOODMAN: Explain what they did. What was the crime that they committed that they’re paying for?

JAMESHENRY: They had—you know, for example, they had a department that’s set up so that wealthy Americans who came to Geneva Airport had a special office. And, you know, something like 10,000 clients of this bank went through that office and, you know, were able to bring in their transactions, check on their accounts in utter privacy. There’s no name on the door. But, you know, they would send bankers undercover to Art Basel, big Miami art convention, every year and meet clients. They sponsored a lot of these art shows.

AMYGOODMAN: So Swiss bankers would come in on tourist visas.

JAMESHENRY: Exactly.

AMYGOODMAN: And do—

JAMESHENRY: And they would be basically recruiting wealthy Americans to take their money secretly to Switzerland, put it there essentially tax-free, no reporting to the IRS. So, for wealthy Americans who were able to play that game, it was worth quite a bit. Of course, for the rest of us, the ordinary taxpayers who are, you know, withheld against and don’t have the option of going to Switzerland, you know, will never meet a Swiss banker in the United States. This is just another case of where we’re transferring tax burdens to the poor and the middle class, who don’t have any choice but to pay up. So, basic question about the rule of law here, about justice being essentially for sale.

You mentioned the Obama administration. Eric Holder used to be an attorney at Covington & Burling, after he left the Clinton administration. He was handling UBS as a client. The chief IRS legal counsel, Mr. Wilkins, used to be a registered representative for the Swiss Banking Association in Washington, when he was a partner at WilmerHale. You have the U.S. treasury secretary, was in charge of Citibank’s global private banking department when he was at Citibank in 2006. So this administration is literally—and, you know, one of the key golfing partners of the president of the United States, Robert Wolf, used to run UBS America. He was a big fundraiser for Obama in 2008. So this administration is permeated with people who are basically very sympathetic to Wall Street and to Swiss interests, as well. So—

AARON MATÉ: Well, you mentioned Attorney General Eric Holder, who’s been sort of the architect of a strategy that forcing banks into guilty pleas should be done in a way that doesn’t harm the economy. And he used his weekly message earlier this month to clarify the Department of Justice position on prosecuting financial fraud.

ATTORNEYGENERALERICHOLDER: There is no such thing as too big to jail. Some have used that phrase to describe the theory that certain financial institutions, even if they engage in criminal misconduct, should be considered immune from prosecution due to their sheer size and their influence on the economy. That view is mistaken, and it is a view that has been rejected by the Department of Justice. To be clear, no individual or company, no matter how large or how profitable, is above the law.

AARON MATÉ: Testifying before the Senate Judiciary Committee a year ago, Holder had in fact suggested that some banks are too big to jail. Do you agree with his denial now that that strategy is not in effect?

JAMESHENRY: There’s no evidence in the settlement that there’s anyone going to jail. At the senior levels of Credit Suisse, everyone is in place. The chairman of Credit Suisse today said that they were "white as snow" and that both he and Dougan would remain on. You know, so that’s just rhetoric. And I think the problem is, we have a lot of rhetoric, and major media are basically playing this up as a major settlement, a first criminal prosecution. The BBC yesterday said that this was the end of bank secrecy in Switzerland. This is just ludicrous. If you look below the covers, this is a big missed opportunity. It’s—you know, we’re not going to have this kind of opportunity again very soon.

AMYGOODMAN: Is it a crime for someone to secret away their finances in a Swiss bank?

JAMESHENRY: If you’re a U.S. citizen, you have to report your income to—worldwide income to the Treasury and the state tax authorities, as well.

AMYGOODMAN: What happened to those names that were released by UBS of wealthy Americans who were hiding their money away in Swiss bank accounts? And what should happen to people?

JAMESHENRY: Well, there have been a lot of settlements with those folks, private settlements that—you know, the IRS did go after quite a few of them. One of the whistleblowers in that case got—Bradley Birkenfeld got a large settlement as a reward for his activity. But one of the issues here is that, in Credit Suisse, we didn’t have whistleblowers, and this Justice Department has really failed to produce or to take advantage of Swiss whistleblowers who were available to them. And so we don’t have any names from whistleblowers like we had in the UBS case. And in this case, they are invoking Swiss secrecy.

]]>
Tue, 20 May 2014 00:00:00 -0400Whistleblower Brad Birkenfeld Rewarded Record $104M for Exposing How UBS Helped Rich Evade Taxeshttp://www.democracynow.org/2012/9/12/whistleblower_brad_birkenfeld_rewarded_record_104m
tag:democracynow.org,2012-09-12:en/story/451082 NERMEEN SHAIKH : We turn now to a major development in the case of a banking whistleblower. Former UBS AG banker Brad Birkenfeld first reported in 2007 that he and his colleagues had encouraged rich Americans to store more than $20 billion in offshore Swiss bank accounts and cheat the IRS . After he came forward, he was convicted of conspiracy and sentenced to prison. Well, he was released from prison in August, and on Tuesday the IRS vindicated his actions with a $104 million award under the IRS whistleblower program.
AMY GOODMAN : UBS ultimately paid $780 million to resolve the investigation, admitted to criminal wrongdoing, and closed the unit where Birkenfeld worked. His disclosure also prompted at least 33,000 Americans to report offshore accounts to the IRS , generating more than $5 billion. The IRS is now investigating at least 11 other banks.
We&#8217;re going directly to Washington, D.C., to Stephen Kohn, co-counsel for UBS whistleblower Brad Birkenfeld, also executive director of the National Whistleblowers Center and the author of The Whistleblower&#8217;s Handbook: A Step-by-Step Guide to Doing What&#8217;s Right and Protecting Yourself . Birkenfeld himself is under home confinement after getting out of jail, not authorized by the Bureau of Prisons to do interviews, now seeking a presidential pardon.
Stephen Kohn, welcome back to Democracy Now! Talk about this unprecedented award to Brad Birkenfeld, who has just gotten out of jail.
STEPHEN KOHN : Well, it&#8217;s the largest whistleblower award in history, but it&#8217;s—Birkenfeld turned in the largest financial frauds. He turned in 19,000 felons and $20 billion in one unit. But we also know 33,000 people are turning themselves in and that the total amount of U.S. dollars in illegal offshore accounts is over $5 trillion. That&#8217;s the estimation from a Senate report. What the IRS did was try to change the dynamic. When the Justice Department prosecuted Bradley Birkenfeld in one of the most absurd and misguided efforts, they took an asset, a person who turned in the keys to the kingdom, the first whistleblower to expose exactly how illegal Swiss banking worked and illegal offshore banking was working across the world, and instead of using him, they persecuted him. The IRS is now turning that around.
The IRS—I think one of the reasons they had to give such a big award is because they need informants. They need other bankers to step forward. And what the Justice Department did had a devastating impact on their whistleblower program. So they&#8217;ve turned around, and they&#8217;ve given the largest whistleblower award ever. We worked on that for over three years, through the process, trying to make sure he won, because his victory is really a victory against offshore illegal banking, where millionaires and billionaires stash their wealth, where corrupt politicians put in their money, drug dealers. When you&#8217;re looking at this illegal offshore banking, it&#8217;s really a handmaiden to corruption. So it&#8217;s extremely important public policy, public interest, to go to war against these banks. So, this award to Mr. Birkenfeld, in our view, is one of the most important step forwards to try to induce other bankers to step forward and really tackle illegal offshore banking.
NERMEEN SHAIKH : Well, Stephen Kohn, offshore tax havens have recently come under increasing focus because of Republican presidential nominee Mitt Romney&#8217;s foreign accounts. Earlier this summer, he defended his foreign investments during an interview with Radio Iowa.
MITT ROMNEY : With regards to any foreign investments, I understand and you understand, of course, that my investments have been held by a blind trust, have been managed by a trustee. I don&#8217;t manage them, don&#8217;t even know where they are. Those—that trustee follows all U.S. laws. All the taxes are paid, as appropriate. All of them have been reported to the government. There&#8217;s nothing hidden there. There&#8217;s nothing. If, for instance, you own shares in, let&#8217;s say, Renault or in Fiat, you still have to pay taxes, you still have to disclose that in the United States.
NERMEEN SHAIKH : That was Republican presidential nominee Mitt Romney speaking earlier this summer. Stephen Kohn, can you talk about the significance of this case and how it relates to what Mitt Romney said?
STEPHEN KOHN : Well, first, to clarify, we don&#8217;t have—this isn&#8217;t an anti-Romney campaign, and we don&#8217;t have any direct information about candidate Romney. But I want to talk about how the Swiss banking system works, illegal offshore banking works. There&#8217;s two ways it happens. First is, you have a direct account sitting in the bank. You&#8217;re trading stocks or gaining interest or whatever. And that was the $20 billion program. The second way is they do set up trusts, offshore trusts in which an American invests in the trust. So you give them a million dollars, and the trustee runs the investments. These are often usually illegal, because the trustee gives the American investor a one-step removal from the actual illegal activities and a method to deny involvement. It also gets very hard to track this money, because if you just put a million dollars into a trust that says has $200 million in assets, how do you follow that money, which may go to one or two or three offshore locations?
AMY GOODMAN : We have five seconds.
STEPHEN KOHN : Yeah, Birkenfeld turned all that in. But to say—I just want to emphasize, this is not an anti-Romney thing, but it does call for more investigation.
AMY GOODMAN : Stephen Kohn, we want to thank you for being with us. I want to encourage people to go to our website today at democracynow.org. Juan González has written a piece in the New York Daily News , as he continues to follow this case. Stephen Kohn, co-counsel for UBS whistleblower Brad Birkenfeld, executive director of the National Whistleblowers Center. And that does it for our broadcast.
We are on our Silenced Majority Tour, an election 2012 tour, continues this week. On Thursday, I&#8217;ll be at the Philadelphia Free Library ; then go to Pittsburgh at McConomy Auditorium at Carnegie Mellon; on Friday at 5:00 p.m. in Cleveland , at 8:00 p.m. at Oberlin College ; Kenyon College noon on Saturday. And we&#8217;ll be moving on from there . NERMEENSHAIKH: We turn now to a major development in the case of a banking whistleblower. Former UBS AG banker Brad Birkenfeld first reported in 2007 that he and his colleagues had encouraged rich Americans to store more than $20 billion in offshore Swiss bank accounts and cheat the IRS. After he came forward, he was convicted of conspiracy and sentenced to prison. Well, he was released from prison in August, and on Tuesday the IRS vindicated his actions with a $104 million award under the IRS whistleblower program.

AMYGOODMAN:UBS ultimately paid $780 million to resolve the investigation, admitted to criminal wrongdoing, and closed the unit where Birkenfeld worked. His disclosure also prompted at least 33,000 Americans to report offshore accounts to the IRS, generating more than $5 billion. The IRS is now investigating at least 11 other banks.

We’re going directly to Washington, D.C., to Stephen Kohn, co-counsel for UBS whistleblower Brad Birkenfeld, also executive director of the National Whistleblowers Center and the author of The Whistleblower’s Handbook: A Step-by-Step Guide to Doing What’s Right and Protecting Yourself. Birkenfeld himself is under home confinement after getting out of jail, not authorized by the Bureau of Prisons to do interviews, now seeking a presidential pardon.

Stephen Kohn, welcome back to Democracy Now! Talk about this unprecedented award to Brad Birkenfeld, who has just gotten out of jail.

STEPHENKOHN: Well, it’s the largest whistleblower award in history, but it’s—Birkenfeld turned in the largest financial frauds. He turned in 19,000 felons and $20 billion in one unit. But we also know 33,000 people are turning themselves in and that the total amount of U.S. dollars in illegal offshore accounts is over $5 trillion. That’s the estimation from a Senate report. What the IRS did was try to change the dynamic. When the Justice Department prosecuted Bradley Birkenfeld in one of the most absurd and misguided efforts, they took an asset, a person who turned in the keys to the kingdom, the first whistleblower to expose exactly how illegal Swiss banking worked and illegal offshore banking was working across the world, and instead of using him, they persecuted him. The IRS is now turning that around.

The IRS—I think one of the reasons they had to give such a big award is because they need informants. They need other bankers to step forward. And what the Justice Department did had a devastating impact on their whistleblower program. So they’ve turned around, and they’ve given the largest whistleblower award ever. We worked on that for over three years, through the process, trying to make sure he won, because his victory is really a victory against offshore illegal banking, where millionaires and billionaires stash their wealth, where corrupt politicians put in their money, drug dealers. When you’re looking at this illegal offshore banking, it’s really a handmaiden to corruption. So it’s extremely important public policy, public interest, to go to war against these banks. So, this award to Mr. Birkenfeld, in our view, is one of the most important step forwards to try to induce other bankers to step forward and really tackle illegal offshore banking.

NERMEENSHAIKH: Well, Stephen Kohn, offshore tax havens have recently come under increasing focus because of Republican presidential nominee Mitt Romney’s foreign accounts. Earlier this summer, he defended his foreign investments during an interview with Radio Iowa.

MITTROMNEY: With regards to any foreign investments, I understand and you understand, of course, that my investments have been held by a blind trust, have been managed by a trustee. I don’t manage them, don’t even know where they are. Those—that trustee follows all U.S. laws. All the taxes are paid, as appropriate. All of them have been reported to the government. There’s nothing hidden there. There’s nothing. If, for instance, you own shares in, let’s say, Renault or in Fiat, you still have to pay taxes, you still have to disclose that in the United States.

NERMEENSHAIKH: That was Republican presidential nominee Mitt Romney speaking earlier this summer. Stephen Kohn, can you talk about the significance of this case and how it relates to what Mitt Romney said?

STEPHENKOHN: Well, first, to clarify, we don’t have—this isn’t an anti-Romney campaign, and we don’t have any direct information about candidate Romney. But I want to talk about how the Swiss banking system works, illegal offshore banking works. There’s two ways it happens. First is, you have a direct account sitting in the bank. You’re trading stocks or gaining interest or whatever. And that was the $20 billion program. The second way is they do set up trusts, offshore trusts in which an American invests in the trust. So you give them a million dollars, and the trustee runs the investments. These are often usually illegal, because the trustee gives the American investor a one-step removal from the actual illegal activities and a method to deny involvement. It also gets very hard to track this money, because if you just put a million dollars into a trust that says has $200 million in assets, how do you follow that money, which may go to one or two or three offshore locations?

AMYGOODMAN: We have five seconds.

STEPHENKOHN: Yeah, Birkenfeld turned all that in. But to say—I just want to emphasize, this is not an anti-Romney thing, but it does call for more investigation.

AMYGOODMAN: Stephen Kohn, we want to thank you for being with us. I want to encourage people to go to our website today at democracynow.org. Juan González has written a piece in the New York Daily News, as he continues to follow this case. Stephen Kohn, co-counsel for UBS whistleblower Brad Birkenfeld, executive director of the National Whistleblowers Center. And that does it for our broadcast.

]]>
Wed, 12 Sep 2012 00:00:00 -0400Exhaustive Study Finds Global Elite Hiding Up to $32 Trillion in Offshore Accountshttp://www.democracynow.org/2012/7/31/exhaustive_study_finds_global_elite_hiding
tag:democracynow.org,2012-07-31:en/story/211f30 AMY GOODMAN : We turn now to a new report that reveals how wealthy individuals and their families have between $21 and $32 trillion of hidden financial assets around the world in what are known as offshore accounts or tax havens. The conservative estimate of $21 trillion—conservative estimate—is as much money as the entire annual economic output of the United States and Japan combined. The actual sums could be higher because the study only deals with financial wealth deposited in bank and investment accounts, and not other assets such as property and yachts.
The inquiry was commissioned by the Tax Justice Network and is being touted as the most comprehensive report ever on the &quot;offshore economy.&quot; It&#8217;s called &quot;The Price of Offshore Revisited.&quot; The study finds private banks are deeply involved in running offshore havens with UBS , Credit Suisse, Goldman Sachs handling the most assets offshore. According to the report, less than 100,000 people worldwide own almost $10 trillion of the wealth held in tax havens.
To talk about the implications of these findings, we&#8217;re joined by the report&#8217;s author, James Henry, economist, lawyer, board member of the Tax Justice Network, former chief economist at McKinsey &amp; Company.
Welcome to Democracy Now!
JAMES HENRY : Thanks very much, Amy.
AMY GOODMAN : It&#8217;s great to have you with us. Tell us what you found.
JAMES HENRY : Well, the $21 trillion figure is the headline story, that&#8217;s a shock to a lot of people, actually represents about 10 to 15 percent of global wealth. So, from that standpoint, we think it&#8217;s a reasonable number. But the interesting thing is that all of this wealth accrues to the top 10 million people on the planet, and a lot of it just to the top 100,000, people with assets over $30 million per household.
The second thing that&#8217;s striking about this is the role of the great international banks that we&#8217;ve all come to know and love, the ones you described—UBS, Credit Suisse, HSBC , JPMorgan—all these banks—Goldman—big recipients of bailout money from taxpayers, and also deeply implicated in the financial crisis of 2008 to the current period. These are the same folks that have specialized in helping the wealthiest people on the planet take their money offshore and hide it from tax authorities.
AMY GOODMAN : You talk about pirate banks.
JAMES HENRY : Right.
AMY GOODMAN : What do you mean?
JAMES HENRY : Well, I mean that this is the business of taking money and moving it to secret offshore accounts and sheltering it from taxes. For example, if you are a wealthy Mexican investor, you can hold your bank deposits in New York City in Citibank or UBS tax-free. The U.S. government doesn&#8217;t collect taxes on bank deposits by nonresident aliens. And it doesn&#8217;t tell the Mexican authorities that you&#8217;re earning all that money. So, basically, we have designed our tax laws—the United States, the U.K., Switzerland—to become the largest tax havens in the world. The actual offshore islands, like the Caymans, are just conduits to these ultimate destinations.
AMY GOODMAN : People would say, well, we knew that about Swiss banks, but that&#8217;s not the same for U.S. banks.
JAMES HENRY : Oh, yeah, absolutely. The leaders in the pack here historically have been U.K. banks, U.S. banks and Swiss banks. And so, you know, we are all upset—our Treasury is trying to get the Swiss private bankers to stop coming to the United States and taking money from wealthy Americans. But our banks have been doing the same thing for decades with respect to Latin America, the Philippines, you know, much of Africa. And that&#8217;s a system that the banks have really designed.
AMY GOODMAN : Let&#8217;s talk about the continent of Africa and what this means for various countries and, most importantly, the majority of the populations there.
JAMES HENRY : Yeah. Well, for example, Nigeria is supposedly a debtor country. But when you look at all the unrecorded capital outflows that have flowed out of Nigeria, it turns out that Nigeria is actually, like many other developing countries, a net creditor of the richest countries in the world. So if you add up and accumulate all the unrecorded capital flows that have accrued to the Nigerian elite, political as well as private sector, you know, the tiny share of that country&#8217;s population owns a vast amount of offshore wealth. So the debt problem is not really a debt problem. It&#8217;s a tax problem. Developing countries account for about a third, we estimate, of the $21 to $32 trillion of financial assets that&#8217;s offshore.
AMY GOODMAN : Some of the critiques of the report, the investigation you did—this is from CNBC : quote, &quot;The problem, says Dan Mitchell, a senior fellow at the Cato Institute, is that the estimate is based on a series of assumptions aimed at making people &#39;believe that much of cross-border investing is all about tax evasion and that all this money should go to government, and that this would be a good thing.&#39;&quot; That&#8217;s what he says. &quot;The real problem facing governments, Mitchell says, is spending not revenues.&quot; Your response, James Henry?
JAMES HENRY : Well, my response is that he hasn&#8217;t read the report, basically. We&#8217;ve been very careful to estimate the size of this black hole using three different methods. We&#8217;ve looked individually at the top 50 banks in the world and have detailed numbers for each one of them. We&#8217;ve looked at 139 developing countries where we can get data on how much their unrecorded capital flows were, and we&#8217;ve built detailed models of those. And we looked at data published by the Bank for International Settlements. So the numbers are the best ever recorded here.
We&#8217;re not suggesting that the—you know, there may not be problems on the spending side, but it&#8217;s outrageous for the wealthiest people on the planet to pay zero taxes. And what this does to developing countries, in particular, because they can&#8217;t tax income, because they can&#8217;t tax wealth, they end up taxing low- and middle-income people with VAT taxes and sales taxes that are regressive. So, basically, what you&#8217;re seeing is that globalization is driving a big hole through the nation state system that was designed to raise tax revenue.
AMY GOODMAN : Let&#8217;s go to Mitt Romney, because that&#8217;s why the whole issue of offshore accounts has come into the big consciousness of the overall American population right now, the presumptive Republican presidential nominee, speaking to Radio Iowa earlier this month about his foreign investments.
MITT ROMNEY : With regards to any foreign investments, I understand—and you understand, of course—that my investments have been held by a blind trust, have been managed by a trustee. I don&#8217;t manage them, don&#8217;t even know where they are. Those—that trustee follows all U.S. laws. All the taxes are paid, as appropriate. All of them have been reported to the government. There&#8217;s nothing hidden there. There&#8217;s nothing—if, for instance, you own shares in, let&#8217;s say, Renault or in Fiat, you still have to pay taxes, you still have to disclose that in the United States.
AMY GOODMAN : That&#8217;s Mitt Romney. James Henry?
JAMES HENRY : Yeah, well, he&#8217;s not alone. That&#8217;s one estimate—one indication of our report. You know, basically, you&#8217;re looking at behavior that&#8217;s engaged in by a lot of Mitt Romneys, and, you know, essentially, the United States is facing kind of a stark choice in this election between the first president in history who, you know, has really had offshore accounts like this. You know, a lot of us who are tax experts—and not necessarily Democrats, by any means—just wonder what the heck is he hiding there. There must be something. You know, John McCain released 23 years of his tax reports, tax returns. Romney is still stopping with 2010. So, if there&#8217;s no problem, just release the returns.
AMY GOODMAN : I want to go more to Mitt Romney&#8217;s—the issue of his hidden wealth. He was speaking to Face the Nation . Senator Dick Durbin of Illinois challenged Mitt Romney to be more transparent with his finances.
SEN . DICK DURBIN : Mitt Romney has failed to make an economic disclosure that every president and candidate for president has made in the last 36 years. Goes back to his father, who disclosed 12 years of tax returns. He&#8217;s disclosed one. Secondly, he is the first and only candidate for president of the United States with a Swiss bank account, with tax shelters, with tax avoidance schemes that involve so many foreign countries. And the third is that when it comes down to his Swiss bank account, there is just no way to explain it. You either get a Swiss bank account to conceal what you&#8217;re doing, or you believe the Swiss franc is stronger than the American dollar.
AMY GOODMAN : That&#8217;s Senator Durbin. James Henry?
JAMES HENRY : Well, I think that he&#8217;s absolutely right. We should demand disclosure. This is a situation where you have essentially representation without taxation, not only for individuals, but also for corporations that are able to move their money offshore, conceal it and then come back to Washington and have enormous political impact on the system, spending their money under Citizens United . You know, Romney is just one kind of stellar example of that.
AMY GOODMAN : Name more names of the banks, who people should be watching for. And what do you think should be done about this?
JAMES HENRY : Good example is HSBC . They&#8217;re number three on our list, a big U.K. bank. They recently had a deferred prosecution agreement with the Department of Justice for laundering $14 billion of cartel drug money. They got off with a $1 billion parking ticket, and their profits per year are about $20 billion. So, you know, this is the Obama administration basically deciding not to close this bank, even though investigators that I&#8217;ve talked to at the bank—who have looked at the bank closely, say this is like BCCI in the &#8217;90s. The only difference is that that was a Pakistani bank, which we decided to close down.
HSBC is just one of the top 10 banks on this list. Collectively, those 10 banks manage about $6.3 trillion of the $12.3 trillion that we located in these top 50 banks. So, you know, the other names on the list, you&#8217;ve mentioned—UBS, Credit Suisse, HSBC , JPMorgan, Pictet, Deutsche Bank, BNP Paribas, Barclays. These are the—
AMY GOODMAN : What about large corporations? You talk about intellectual—moving intellectual property offshore—
JAMES HENRY : Yeah.
AMY GOODMAN : —corporations like Google and Pfizer.
JAMES HENRY : Right. Well, in our film, We&#8217;re Not Broke , which was a Sundance documentary, we discussed corporate tax evasion. And this is the latest trend in the software industry and also in the healthcare industry, drug industry. Pfizer, Google, Microsoft, companies like General Electric are parking their intellectual property, their brands and software, offshore in places like Bermuda and paying royalties to themselves and essentially parking the profits in these low-tax jurisdictions and not paying any taxes on it. So, Google last year saved about $3 billion by that. So if you have, you know, this core kind of value, intellectual capital, moving offshore to low-tax havens, where it&#8217;s never been produced, essentially is a kind of, you know, decapitalization of the U.S. And all of these countries now also parked all these profits abroad to get tax breaks, and then they want a deal when they bring the money back. They want a repatriation tax cut, 5 percent.
AMY GOODMAN : So, what should happen?
JAMES HENRY : Well, we&#8217;ve tried this repatriation tax cut in 2004. It didn&#8217;t produce any jobs. And we shouldn&#8217;t—absolutely shouldn&#8217;t get in—the corporate—give in to this lobby. The corporate income taxes and personal income taxes have dropped steadily since the 1980s on high-income corporations. And, you know, at the same time, we&#8217;ve seen the growth of this offshore haven. So it isn&#8217;t driven by tax rates; it&#8217;s driven by greed.
AMY GOODMAN : James Henry, why did you decide to do this report? I mean, you were chief economist at McKinsey, which isn&#8217;t so different from Bain, in some ways, a major business consultancy.
JAMES HENRY : Right. Well, I&#8217;ve done a few things since then. And I think—you know, I&#8217;m on the global board of Tax Justice Network, which is an organization that&#8217;s grown up in the last decade to fight offshore havens. And we are dedicated volunteers working on this problem of global tax justice. This is vital to democracy, as well as to the tax system, because if you can&#8217;t have fair taxes, you end up having representation without taxation. And I think the poorest countries in the world are forced to rely on very regressive taxes to pay their bills.
AMY GOODMAN : We&#8217;re going to link to your report , James Henry, economist, lawyer, board member of Tax Justice Network, former chief economist at McKinsey &amp; Company, author of the report, &quot;The Price of Offshore Revisited.&quot; AMYGOODMAN: We turn now to a new report that reveals how wealthy individuals and their families have between $21 and $32 trillion of hidden financial assets around the world in what are known as offshore accounts or tax havens. The conservative estimate of $21 trillion—conservative estimate—is as much money as the entire annual economic output of the United States and Japan combined. The actual sums could be higher because the study only deals with financial wealth deposited in bank and investment accounts, and not other assets such as property and yachts.

The inquiry was commissioned by the Tax Justice Network and is being touted as the most comprehensive report ever on the "offshore economy." It’s called "The Price of Offshore Revisited." The study finds private banks are deeply involved in running offshore havens with UBS, Credit Suisse, Goldman Sachs handling the most assets offshore. According to the report, less than 100,000 people worldwide own almost $10 trillion of the wealth held in tax havens.

To talk about the implications of these findings, we’re joined by the report’s author, James Henry, economist, lawyer, board member of the Tax Justice Network, former chief economist at McKinsey & Company.

Welcome to Democracy Now!

JAMESHENRY: Thanks very much, Amy.

AMYGOODMAN: It’s great to have you with us. Tell us what you found.

JAMESHENRY: Well, the $21 trillion figure is the headline story, that’s a shock to a lot of people, actually represents about 10 to 15 percent of global wealth. So, from that standpoint, we think it’s a reasonable number. But the interesting thing is that all of this wealth accrues to the top 10 million people on the planet, and a lot of it just to the top 100,000, people with assets over $30 million per household.

The second thing that’s striking about this is the role of the great international banks that we’ve all come to know and love, the ones you described—UBS, Credit Suisse, HSBC, JPMorgan—all these banks—Goldman—big recipients of bailout money from taxpayers, and also deeply implicated in the financial crisis of 2008 to the current period. These are the same folks that have specialized in helping the wealthiest people on the planet take their money offshore and hide it from tax authorities.

AMYGOODMAN: You talk about pirate banks.

JAMESHENRY: Right.

AMYGOODMAN: What do you mean?

JAMESHENRY: Well, I mean that this is the business of taking money and moving it to secret offshore accounts and sheltering it from taxes. For example, if you are a wealthy Mexican investor, you can hold your bank deposits in New York City in Citibank or UBS tax-free. The U.S. government doesn’t collect taxes on bank deposits by nonresident aliens. And it doesn’t tell the Mexican authorities that you’re earning all that money. So, basically, we have designed our tax laws—the United States, the U.K., Switzerland—to become the largest tax havens in the world. The actual offshore islands, like the Caymans, are just conduits to these ultimate destinations.

AMYGOODMAN: People would say, well, we knew that about Swiss banks, but that’s not the same for U.S. banks.

JAMESHENRY: Oh, yeah, absolutely. The leaders in the pack here historically have been U.K. banks, U.S. banks and Swiss banks. And so, you know, we are all upset—our Treasury is trying to get the Swiss private bankers to stop coming to the United States and taking money from wealthy Americans. But our banks have been doing the same thing for decades with respect to Latin America, the Philippines, you know, much of Africa. And that’s a system that the banks have really designed.

AMYGOODMAN: Let’s talk about the continent of Africa and what this means for various countries and, most importantly, the majority of the populations there.

JAMESHENRY: Yeah. Well, for example, Nigeria is supposedly a debtor country. But when you look at all the unrecorded capital outflows that have flowed out of Nigeria, it turns out that Nigeria is actually, like many other developing countries, a net creditor of the richest countries in the world. So if you add up and accumulate all the unrecorded capital flows that have accrued to the Nigerian elite, political as well as private sector, you know, the tiny share of that country’s population owns a vast amount of offshore wealth. So the debt problem is not really a debt problem. It’s a tax problem. Developing countries account for about a third, we estimate, of the $21 to $32 trillion of financial assets that’s offshore.

AMYGOODMAN: Some of the critiques of the report, the investigation you did—this is from CNBC: quote, "The problem, says Dan Mitchell, a senior fellow at the Cato Institute, is that the estimate is based on a series of assumptions aimed at making people 'believe that much of cross-border investing is all about tax evasion and that all this money should go to government, and that this would be a good thing.'" That’s what he says. "The real problem facing governments, Mitchell says, is spending not revenues." Your response, James Henry?

JAMESHENRY: Well, my response is that he hasn’t read the report, basically. We’ve been very careful to estimate the size of this black hole using three different methods. We’ve looked individually at the top 50 banks in the world and have detailed numbers for each one of them. We’ve looked at 139 developing countries where we can get data on how much their unrecorded capital flows were, and we’ve built detailed models of those. And we looked at data published by the Bank for International Settlements. So the numbers are the best ever recorded here.

We’re not suggesting that the—you know, there may not be problems on the spending side, but it’s outrageous for the wealthiest people on the planet to pay zero taxes. And what this does to developing countries, in particular, because they can’t tax income, because they can’t tax wealth, they end up taxing low- and middle-income people with VAT taxes and sales taxes that are regressive. So, basically, what you’re seeing is that globalization is driving a big hole through the nation state system that was designed to raise tax revenue.

AMYGOODMAN: Let’s go to Mitt Romney, because that’s why the whole issue of offshore accounts has come into the big consciousness of the overall American population right now, the presumptive Republican presidential nominee, speaking to Radio Iowa earlier this month about his foreign investments.

MITTROMNEY: With regards to any foreign investments, I understand—and you understand, of course—that my investments have been held by a blind trust, have been managed by a trustee. I don’t manage them, don’t even know where they are. Those—that trustee follows all U.S. laws. All the taxes are paid, as appropriate. All of them have been reported to the government. There’s nothing hidden there. There’s nothing—if, for instance, you own shares in, let’s say, Renault or in Fiat, you still have to pay taxes, you still have to disclose that in the United States.

AMYGOODMAN: That’s Mitt Romney. James Henry?

JAMESHENRY: Yeah, well, he’s not alone. That’s one estimate—one indication of our report. You know, basically, you’re looking at behavior that’s engaged in by a lot of Mitt Romneys, and, you know, essentially, the United States is facing kind of a stark choice in this election between the first president in history who, you know, has really had offshore accounts like this. You know, a lot of us who are tax experts—and not necessarily Democrats, by any means—just wonder what the heck is he hiding there. There must be something. You know, John McCain released 23 years of his tax reports, tax returns. Romney is still stopping with 2010. So, if there’s no problem, just release the returns.

AMYGOODMAN: I want to go more to Mitt Romney’s—the issue of his hidden wealth. He was speaking to Face the Nation. Senator Dick Durbin of Illinois challenged Mitt Romney to be more transparent with his finances.

SEN. DICKDURBIN: Mitt Romney has failed to make an economic disclosure that every president and candidate for president has made in the last 36 years. Goes back to his father, who disclosed 12 years of tax returns. He’s disclosed one. Secondly, he is the first and only candidate for president of the United States with a Swiss bank account, with tax shelters, with tax avoidance schemes that involve so many foreign countries. And the third is that when it comes down to his Swiss bank account, there is just no way to explain it. You either get a Swiss bank account to conceal what you’re doing, or you believe the Swiss franc is stronger than the American dollar.

AMYGOODMAN: That’s Senator Durbin. James Henry?

JAMESHENRY: Well, I think that he’s absolutely right. We should demand disclosure. This is a situation where you have essentially representation without taxation, not only for individuals, but also for corporations that are able to move their money offshore, conceal it and then come back to Washington and have enormous political impact on the system, spending their money under Citizens United. You know, Romney is just one kind of stellar example of that.

AMYGOODMAN: Name more names of the banks, who people should be watching for. And what do you think should be done about this?

JAMESHENRY: Good example is HSBC. They’re number three on our list, a big U.K. bank. They recently had a deferred prosecution agreement with the Department of Justice for laundering $14 billion of cartel drug money. They got off with a $1 billion parking ticket, and their profits per year are about $20 billion. So, you know, this is the Obama administration basically deciding not to close this bank, even though investigators that I’ve talked to at the bank—who have looked at the bank closely, say this is like BCCI in the ’90s. The only difference is that that was a Pakistani bank, which we decided to close down.

HSBC is just one of the top 10 banks on this list. Collectively, those 10 banks manage about $6.3 trillion of the $12.3 trillion that we located in these top 50 banks. So, you know, the other names on the list, you’ve mentioned—UBS, Credit Suisse, HSBC, JPMorgan, Pictet, Deutsche Bank, BNP Paribas, Barclays. These are the—

AMYGOODMAN: What about large corporations? You talk about intellectual—moving intellectual property offshore—

JAMESHENRY: Yeah.

AMYGOODMAN: —corporations like Google and Pfizer.

JAMESHENRY: Right. Well, in our film, We’re Not Broke, which was a Sundance documentary, we discussed corporate tax evasion. And this is the latest trend in the software industry and also in the healthcare industry, drug industry. Pfizer, Google, Microsoft, companies like General Electric are parking their intellectual property, their brands and software, offshore in places like Bermuda and paying royalties to themselves and essentially parking the profits in these low-tax jurisdictions and not paying any taxes on it. So, Google last year saved about $3 billion by that. So if you have, you know, this core kind of value, intellectual capital, moving offshore to low-tax havens, where it’s never been produced, essentially is a kind of, you know, decapitalization of the U.S. And all of these countries now also parked all these profits abroad to get tax breaks, and then they want a deal when they bring the money back. They want a repatriation tax cut, 5 percent.

AMYGOODMAN: So, what should happen?

JAMESHENRY: Well, we’ve tried this repatriation tax cut in 2004. It didn’t produce any jobs. And we shouldn’t—absolutely shouldn’t get in—the corporate—give in to this lobby. The corporate income taxes and personal income taxes have dropped steadily since the 1980s on high-income corporations. And, you know, at the same time, we’ve seen the growth of this offshore haven. So it isn’t driven by tax rates; it’s driven by greed.

AMYGOODMAN: James Henry, why did you decide to do this report? I mean, you were chief economist at McKinsey, which isn’t so different from Bain, in some ways, a major business consultancy.

JAMESHENRY: Right. Well, I’ve done a few things since then. And I think—you know, I’m on the global board of Tax Justice Network, which is an organization that’s grown up in the last decade to fight offshore havens. And we are dedicated volunteers working on this problem of global tax justice. This is vital to democracy, as well as to the tax system, because if you can’t have fair taxes, you end up having representation without taxation. And I think the poorest countries in the world are forced to rely on very regressive taxes to pay their bills.

AMYGOODMAN: We’re going to link to your report, James Henry, economist, lawyer, board member of Tax Justice Network, former chief economist at McKinsey & Company, author of the report, "The Price of Offshore Revisited."